* China South City drops after reports on bulk sale of its
shares
(Updates to midday)

By Grace Li

HONG KONG, July 29 (Reuters) - China shares hovered near the
year's highs on Tuesday while Hong Kong's key index edged up
from its best close in more than 3-1/2 years on spillover from
improving views of the Chinese economy.

By midday, the Hang Seng Index rose 0.3 percent to
24,493.41 points. The China Enterprises Index of the top
Chinese listings in Hong Kong inched up 0.1 percent.

The CSI300 of the leading Shanghai and Shenzhen
A-share listings and the Shanghai Composite Index each
added 0.1 percent. The Shanghai benchmark stood at 2,180.52
points. Both swung between negative and positive territory in
morning trade.

The CSI300 is now in its eighth consecutive winning session,
having climbed almost 8 percent in the past seven sessions.
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